Good morning, and warm welcome to the SmartCraft Q4 2025 report. It's gonna be a pleasure to guide you through our Q4 numbers and information. Please read the disclaimer when you're watching and listening to this cast. So what are we going to cover today? Well, on the agenda, we're gonna talk about This is SmartCraft. We're gonna talk about the Q4 highlights. We're gonna talk about the Q4 financials, and we're gonna do a summary, and then we're gonna give the opportunity to have a Q&A. So if you have questions or want to know different things, then you can post that and get the possibility to get direct input in this call. Now, who are we that going to present today? So first, my name is Jeremias Jansson. I'm the CEO at SmartCraft. I've been with SmartCraft since the beginning of January.
Prior to SmartCraft, I worked at both Quinyx and Unit4, and I have about 25+ years experience in the software industry. It's really, really fun to be part of the SmartCraft team. With me today, we also have Kine Kragholm Olsen, our interim CFO, who's gonna present herself when we come into the financial section of today's presentation. So let's jump into it. Now, first and foremost, I want to tell you a little bit what SmartCraft is. And if we look at SmartCraft, why do we exist? What do we do? Where do we operate, and who are our customers? And without being too long in that presentation, we can say that what we love and what we want to do is to offer solutions to help our customers to plan and work more efficient. And who is our customers?
Well, normally, our customers is in the construction sector and the property management sector, and they tend to be smaller customers in general. Now, to handle this and help our customers with all these different topics, we decided in Q4 last year to go over to a business area structure. What you see in this slide is basically how the company is split into different business areas. The three business areas to the left, the Electro, the HVAC, and the SME Construction, is targeting more or less smaller companies. The Enterprise segment targets companies who are a little bit larger, and in that case, also a little bit more in the property management sector.
Now, this is very important for us with the business area because it makes it possible for us as a company to make sure that we keep the good knowledge about what our customers are doing in one area. So, for example, in Electro, we are trying to be a specialist into understanding how we can help electricians all over our customer base to improve their daily lives. It's a very, very important topic for us. To support in this, as you also can see on this slide, we have different products, and of course, I love our products, but the fact is that the products, in a sense, is not the most important thing for us. The important thing is how these different products helps our customers, as I said, in their daily life. That is our passion. Now, how do we then do that? Well, you know what?
It's not easy to be a small company in a construction sector. It's so many different things that you have to do every day when you go up in the morning. Of course, you have a business to run, but you also have customers to manage, and that basically means that you have to think about, "Okay, how am I efficient with time?" And, for example, if you're a company with 4, 6 persons employed, you are, of course, the boss of that company. You're the founder, you're the owner, but you're also coworker. Normally, you're out there on the field working as well. And then to plan and think about how to be efficient is not that easy without support.
You have to communicate because, in many cases, you're driving around in a car, for example, to different small workplaces, and then you have to find a way to communicate to your other coworkers in a very efficient way. Then you have to think about safety. Most of the people that we have as a customer has a big passion for their coworkers. They're close to them, and they want them to be safe. And then, of course, they want to make sure that they run their business in a proper way. This is how we help our customers, by making sure that they have tools in their daily lives that supports them without being a distraction.
Now, in this quest for making it easy for our customers to be efficient but at the same time not be distracted, we are very happy that we have placed ourselves in a very strategic positions when it comes to the new AI era that started a couple of years ago. What makes us special in this place is, of course, the fact that through decades of serving this customer group, we have gathered a lot of data and knowledge about this space. Why is that interesting for our customers that we have managed to do that?...
Well, basically, the fact is that if you're a small company, as I talked about, and you have a couple of coworkers, you are probably in a position where even if you have a big passion of trying to find solutions in this area of AI, you have limited time and place to do that, and that's where we can step in. Because of our fact of gathering data over this vast period of time, we can help our small customers to basically be more efficient because we know how the daily life works, and more important, we also know how to gather that data and structure that data, so it can give them the outcome. In this presentation, we will talk about some solutions that we have done, especially one that we have pushed in the offering process for electricians.
What we do in that solution, I will talk a little bit more deeper into this presentation, but basically, we're using the data we have to make sure that they can offer their work in a faster way to the customer, which of course, enhances their profit margin enormously. Now, data is important when we talk about using AI. Another thing that is very important is that in our system, the data is part of a workflow. What do I mean with a workflow? Well, if you think about it, the idea is that you have a point-to-point solution, which means that you're basically just doing one task in a solution, and then you do another part in another solution. That becomes very tricky for a small customer. What you want to do is a workflow.
So you start with one task, then you finish that. That task leads to another task, then you finish that, and that leads to a third task, then you have a whole process. Now, you could say it's become easier to build code, and that's probably true in the AI era. But to think about how to structure the workflows and combine that with data that is not public, but instead used by customers and gathered by us, that's something that is much more complex, and we have that possibility. Then, another leverage that is important for us is our customer relationship. The truth is that without customers, we are nothing. That's true for most of the companies, but especially true when you have many customers, as we have, dependent on us every day.
And that customer relationship we can use to test scenarios on how they can be more efficient through the data, through the workflows, through the customer behaviors that they are using, and that we can see in our system. This gives us a pattern of the working day, a pattern on how they work, where it works, and how it happens during the day. All those things combined makes our position very unique. Now, on top of that, as I mentioned before, many of our SME customers doesn't have the bandwidth of testing out lots of different tools. They needs to have one go-to tool for the day, and many times that's our tools, our products.
For us to combine all these different things in the AI and deliver that to the customer, in the end, will put us in a much stronger position, but will also put our customer in a much stronger position. So I'm really looking forward to all the enhanced functionality that we can give to our customers through the benefit of AI. Now, another good thing with the AI is that today we're sitting with extremely large TAM. There are lots of positive and possible customers out there. Now, the historic truth has been that many of our customer segment has choose to not have a solution at all. The reason for that is many, but with the enhanced use of AI, we think that this is going to be a way of increasing the TAM for us.
It's gonna be a possibility for us to reach even more customers and making the possibility to serve more percentage of our total TAM even better. Now, let us step in a little bit to the Q4 highlights. So if we look at Q4 2025, from a more financial view, we can say we continue to grow with 8.4 year-over-year growth, 6.5% organic, which is decent, but of course, it's pressured by the climate around us. We continued to increase our adjusted EBITDA CapEx, which is also good. We are trying to always make sure that we are cost-conscious, at the same time, that we invest in the new technology that is possible. Regarding the cash flow, we actually had a dip in that number year-over-year. However, that is built mainly by a couple of different extraordinary situations.
The biggest two ones of that is actually the additional tax payment where we have done. And the other big differentiator year-over-year is that we have paid a lot more in AP. And when Kine goes through this, she will talk a little bit more in detail about the cash flow, but more or less, those two buckets is about NOK 16 million together of the differences. There are also some other extraordinary costs that was related to the fact that we switched into new business areas, and also some changes in our Norwegian operations. Churn remains flat year-over-year, but we're still a little bit positive because it actually still is the third quarter in a row where churn goes down. But as it says, year-over-year, flat.
Now, when we look at too and try to see what happens on the market, of course, the numbers that we perform is an extremely important indicator. But another indicator is actually what happens with our marketing effort and how much traction we see is on the market. And as you can see, we have several strong numbers here, which gives us a little bit of a positive for the future. Even, of course, in the end, it's about converting this into sales as well, where the soft surrounding macroeconomic climate has pushed downwards. But we can see that the interest is there for our products.
Now, as I alluded to before, we started actually pretty early with thinking about how we can use AI to get proven revenues, and this is especially true for SmartCraft Spark and SmartCraft Flow, which are, of course, new products that we have developed and that we've launched on the market in recent times. When we look into SmartCraft Spark, we can see that we have already got into a situation, as you can see from these different data points, where we got a lot of customers to use these tools. Even if we are in early days, and of course, we want to grow this much, much more. How do we know that? Well, we can see, for example, that they're using these products essentially for doing quotes.
As I talked to you a little bit earlier about the quoting part and how much time that takes for an electrician or a person working in HVAC is actually much bigger than you could think. And since they are small companies, it means that every offer they want to send out takes time from the daily other work that they could do, where they can get revenues for it. So our way of making sure that the quotation goes much faster for them by gathering the data for them is a huge enabler for them, and it will be more things to come in this area for sure. We are dedicated to use AI in reality, not as just a history storytelling tool.
Now, another positive thing that happened in Q4 was that we managed to continue our expansions and do some new entries outside of Scandinavia with our product, Locka. We are, of course, looking at our product stack and see how can we get those products into more countries. And as we informed you about before, we want to enter the UK strongly. And Locka has now managed to take their first customer in the UK, while also expanding into more customers into Finland. And that's very positive because Locka is a product which can be globalized step by step. And again, also here, it's early days. We're humble that it's not easy to go into new countries with products, but we see some good starting points and success with this product. With that, I will hand over to Kine to present herself and the Q4 financials.
Here you go, Kine.
Thank you, Jeremias. So my name is Kine. I'm the interim CFO at SmartCraft, and I've been with SmartCraft since 2021. So diving into more of the details from the highlights that you already presented, Jeremias, we are reporting an ARR of NOK 522 million. That's a total growth of 8.4% year-over-year, and underlying for that is a 6.5% organic growth as well. We see continued improvement in churn with 0.4 percentage point, quarter-over-quarter, and also, Q4 has the highest organic growth in ARR quarter-over-quarter since Q2 2024. So we are seeing some small positive signs within churn, but also downgrades in Q4. The total reported revenue for Q4 is NOK 144 million.
That's a 5.4 increase year-over-year. We're still focusing on transitioning even more revenue from non-recurring to recurring, and Q4 is, we have a 95.9% recurring revenue share. The EBITDA minus CapEx margin is, of course, important for us. We see an increased margin compared to 2024 of 2.5 percentage points, and but there's a decrease compared to Q3, but that's also a seasonal trend that we've seen the past years as well.... We continue our R&D CapEx, and we have continued our investments for strategic development projects. But, and the level of R&D is 7.2% in Q4 isolated. For the full year of 2025, we are approximately at 8%, and that's in line with what we previously presented as well.
Q4 is the first quarter where we are doing our segment, the new segments for business areas. Some highlights from all of the different business areas are coming now. SME Construction that operates within Norway and Sweden have a reported revenue growth of 10.6% year-over-year. Under that is a organic growth in the recurring revenue of 7.4% year-over-year, and they have a margin of 55.1%. That's a small decrease from year-over-year, but they will see that they are affected by higher recruitment costs, but also some increased marketing spend related to trade fairs in Q4. HVAC and Plumbing is, at the moment, only present in Norway. They have reported a revenue of NOK 32.6 million in the quarter, and that's a 1.5% growth year-over-year.
Organically, that's for the recurring revenue, that's 1.7%. They have a margin of 42.9% at the adjusted EBITDA, and they also report some decrease, but it's mainly affected by transition in personnel that you mentioned earlier, Jeremias, but they also have conducted trade fairs that's only that we did not attend to in 2024 because they're only every second year. Electro is currently present in Norway, Sweden, and Finland. They have recorded revenue of NOK 17.7 million, growing 11.1% year-over-year. The underlying growth for the recurring revenue there is 9.8%. They report a margin of 24.6 in Q4 2025, and that's an increase compared to 2024.
We see effects by streamlining the product portfolio within Electro that have a positive effect in the adjusted EBITDA. Enterprise, they are present in Sweden, Finland, and UK, and they have a recorded revenue of NOK 37.3 million in the quarter. That's a decrease in 0.7% year-over-year, but underlying is an growth in the recurring revenue of 4.3% year-over-year. So this is where we see the biggest effect in the transition from non-recurring to recurring revenue. The adjusted EBITDA margin is 20%, and that's an increase compared to 2024. We see that that's driven by strong renewals, better contract quality, but also a strong focus on cost control throughout the year. The overall financial position is very strong.
As you mentioned earlier, Jeremias, with the cash flow, we have a decrease in operational cash flow, and the tax payments are in a high degree, prepayments of tax in Sweden. And then we have timing differences with payments of accounts payables, where the accounts payables were significantly higher by the end of Q3. For the full year of 2025, we have seen that it's normalized since we've made some changes in invoicing routines for annual invoicing in 2023 and 2024. Our full balance sheet is not very much has changed there. We have a solid equity position of 74%. We hold 4.05% in treasury shares, but the story is that we're still net cash positive, and we have a negative net working capital as well. That's very positive for us.
Back to you, Jeremias.
Thank you so much, Kine. Very great to see the numbers presented in this distinct way. So, as we all can see, of course, we have had growth in Q4, but of course, we're always working with the factor of trying to increase that growth, to sell more, to give more value to our customers. And we try to explain how we think about this in this slide. So basically, first, we have the base, or maybe the root, which is basically our current offerings that is on the market. And there, of course, we're working with these products, thinking about how to put a pricing structure into those products, how to sell more efficient, how to reach more of our TAM. And that is, of course, our fundamentals and our daily business.
On top of that, we have, for a period of time, been thinking about how to build the future winners, and that's where the improvement can be found, probably. We have invested into Spark and Flow and also other function and features in our other products. What we're trying to do is to do different scalable platforms, where we can basically accelerate our cross-sell on our existing customer base, at the same time, of course, reaching, reaching new customers, and new target market, and that is our second pillar to try to achieve our medium-term organic growth target. On top of that, we also will do acquisitions, M&A, when the price is right, when the timing is about right, and when the value is right for us.
Of course, in every changing market, every month, every possibility, you have to think about: Is this the right situation for us? So we are actively working with the pipeline on M&A, but we also are very cautious about what to buy and how to buy it. So basically, this is the pyramid of what we're working with daily to ensure that we are profitable while growing and that we can scale our solution. Now, as a final slide before we go to the Q&A, I just want to remember everyone that we will, of course, also do relisting from Oslo to Stockholm, Nasdaq, and that is planned to happen now in Q1. You can, of course, go in and look at our information around this if you want to have more detail.
But the important thing is to remember why we're doing this as well, and the most important part of this is, of course, that we have a large portion, actually about 50% of our revenues in Sweden. We want to, of course, find a way of having liquidity in our share, and we also know that Sweden has a very strong investor community. So that was the background on why we are doing this relisting now in Q1. Now, friends, viewers, customers, investors, coworkers that is listening in to this, let's say thank you for listening in to this presentation, and let's move over to hopefully some good, great, fantastic Q&A.
Very good. Thank you very much, Jeremias and Kine. We have questions coming in on the chat, and please continue to submit questions through the button on the right-hand side of the screen. So there's a few already. One, building on your comments on geographical expansion: Are you open to take a temporary hit to margins in order to drive geographical expansion of your products?
So in general, we are trying to handle the geographic expansion within our ideas of our financial situation, which basically means that we want to keep the margin more or less where they are, around 30%, to simplify it, and therefore still be able to expand. If we would get the opportunity that is extraordinary, we would of course think about it, but the plan is in standard to do it within the situation we all have.
Thank you very much. One question on, on your growth rates: Why is HVAC and Plumbing barely growing, while electro grew by almost 10%, and SME Construction by 7%? Is that mostly re-related to the underlying markets, or is it due to you having better product offerings in the latter two or other things?
It is mostly affected by the fact that the market in Norway has been pretty soft, and for HVAC, we have a majority of our revenues from Norway.
Very good. You talked about downgrades, and the development from Q3 to Q4 with regards to downgrades. Could you elaborate a bit on that, how that has developed?
Yeah. We have a decrease in downgrades as we're measuring it on a rolling twelve period. That's down 0.2 percentage points compared to Q3. But we're still seeing that we have major downgrades within Finland that we already had disclosed previously. So those are still also in effect, but that means that the other downgrades, if we disregard, are still in a positive trend as well.
Thank you. One question on Sweden: Have you seen reduced activity in Sweden following the expiry of the temporary tax deduction increase during Q1?
No, we couldn't say that we've seen strong signals of that, but of course, Q1 is still very young in that sense, so let's see what happens.
Thank you. Reminder, please continue to submit questions. We have a few more that are already here. How much are you increasing prices for 2026, and how should we see that shaping out through the year in terms of effect on ARR and revenue?
So as we have announced before, we increased the prices of one of our biggest products, Bygglet, with about 10%. The percent numbers for different products are a little bit different on what region and what product. We will continuously look into the pricing schemes of those products and try to find a way of pushing the prices up, but at the same time, also giving our customers more feature functions.
Thank you. There's one question on top-line growth, and how you expect to see that going through 2026. What would drive the further acceleration, and where would it come from, the way you see it today?
... So first of all, as we have talked about, we have, of course, a softer macroeconomic climate that has been present. So of course, that's an external factor that we will see what happens with during this year. There are different inputs around that. If we talk about our own business, what we will push is, of course, the cross-sell, as I said, on existing base, trying to sell other products into that base, and that is hopefully on all geos and all products.
Thank you. A question on the competitive landscape. How do you see the competitive landscape and the picture there, as of today?
So of course, we are always very humble. We have very good competitors, of course. Still, I would say that the biggest competitors in my mind is that the customer is not using a solution. And I think that for all of us, including, unfortunately, there may be our competitors, is a big possibility.
Thank you. You talked a lot about AI and the opportunities and your, your strength there. Can you provide a few more examples on how you seek to and how you plan to integrate agentic AI into the workflows? Are there any, any further examples you can point to or, or, or areas that this is applicable?
Yeah, I think that, of course, the biggest shift on the market is that AI gives you the possibility of writing code easier. That doesn't mean that other code writing will be easy, because it has to be thought through what you're doing as well, and you can get some help, but you also need to steer it very clear. I think what we will put a lot of effort into is to think about the A to Z in our products. How can we, in step-by-step in the workflow, use AI to improve how fast one of our customers can use a certain process? And the example I gave was, for example, the offering process, where we've seen an extreme increase of the speed that our customers can do that.
That's what we will focus on to make sure that we do solutions in the workflows, step by step, taking out tasks that are cumbersome for customers in general, and try to simplify that. That's gonna be our focus.
Jeremias, through your career prior to SmartCraft, you've been working a lot on pricing models, and you talked about it also earlier here. Can you elaborate a bit more on how you see that in SmartCraft and the opportunities, for example, value-based versus seat-based, et cetera?
So I think that, in general, when you talk about prices, the most important fundamental is to make sure that it's a win-win. And what do I mean with that? Well, of course, we want the price of our product to reflect the good things that they're doing for the customer, because raising prices without giving anything to the customer is probably long term, not a success. Therefore, we will focus on making sure that price increases goes hand in hand with increased benefit for the customers. So I would say a lot of value-based thinking about that for the customer.
Thank you very much. We are near the end of the list of questions, so please continue to submit, if you have a few more. I'll take the last few here. You still note the 15%-20% growth target in the midterm, in your presentation. It's been difficult to achieve for some time. Why do you see this still as a valid target?
Because we believe that one of the pressure on this one has been the surrounding, soft market for us. However, we also realize we always have to adopt and make sure that we do things better. But we believe that in the strategy that we have built, and the fundamentals that we have in our strong customer base, in our strong products, this is possible to achieve.
Thank you. One more on the competitive landscape, but a different angle into it. Have you seen any new competitors or startups enter the market in your field, either AI-enabled or otherwise?
There are small competitors coming up all the time. We saw a new one last week in Finland, for example, entering the market. I think what is a benefit for us is our, as I said, our decades of data that we have. So there will always be new competitors. We're very humble towards them. We go up every morning in the SmartCraft team and try to figure out how to work even better. There will always be new competitors, but not any new competitors that has significantly changed the space in our territories.
Thank you. Jeremias, have you identified any low-hanging fruit with regards to improvements or initiatives, now that you joined and been here for a month, and a little bit more?
Yeah. It's, of course, early days for me, so I have to be respectful of that. What I've seen is that we have built a very good base, and I think with the change of the organization into business areas, we have the possibility to, as I say, push the cross-sell. So that's gonna be a focus.
Thank you very much. Last question on M&A. There's been a lot of pressure on valuation of SaaS companies over the last few weeks and months. Do you see this as an opportunity to double down on M&A, and what's your pipeline look like right now?
Yeah. So we have, of course, M&A pipeline, and as I said, it could be a opportunity in some cases, of course. In the end, it's about meeting between the buyer and the seller, as always, and it's not always certain that the seller is okay to accept the current market conditions. But with that said, we are looking into possibilities, and if we get the right situation, the right product that can give benefit to us and especially our customers, then, of course, we're willing to do a deal.
Thank you very much. With that, we'll wrap up the Q&A session, and I'll hand the word back to you, Jeremias.
Thank you so much, and thank you all for all the good questions. It was a pleasure to have a little bit of time presenting what we've done in Q4 for you. The next time, when we have the presentation of the Q1, and the quarter one, we, of course, hopefully, gonna be on the stock exchange in Stockholm. I'm looking forward to again meet you then in another presentation. Thank you so much for your time. Have a fantastic Friday, and take care.